Behodar: Stuff says that the new price is 6 cents per GB, but that's not correct, is it? SCC charges for bandwidth rather than per GB, right? 6 cents per Gb/s doesn't sound right to me either though...

Yeah, ISPs buy Mbit/s.. Last time I saw the going rate, it was ~$100-150 per mbit/s, depending on how much you buy, thought that might be out of date by now, someone feel free to correct me. :)

Behodar: Stuff says that the new price is 6 cents per GB, but that's not correct, is it? SCC charges for bandwidth rather than per GB, right? 6 cents per Gb/s doesn't sound right to me either though...

Nobody really bills per GB, ISP's and upstream providers typically buy and sell bandwidth in Mbps (or Gbps). It's then up to ISP's to translate this to GB caps.

The problem is the media have made a big deal out of something that understand very little about. SX's transit costs are merely that, the cost to carry data over the SX cable. Capacity on the SX cable is pointless without transit at either end to connect to networks both in NZ, and transit in the US to connect to the rest of the world. SX's pricing doesn't include either.

Today's annuncement is a bit like saying the price of glass has dropped, therefore beer should be cheaper!

codyc1515: Capacity increases, cuts prices? I'd expect to see those written the other way around..

Why?

If you increase capacity you clearly need to sell that extra capacity. How do you do that? Discount the price - convincing ISP's to buy more capacity.

It's been the standard submarine cable business model, and SX's prices have typically dropped every year. The same model also exists for ISP's - an ISP buys extra of this cheaper capacity and what do they do? Increase caps, and reduce the costs for higher use users.

"But despite a sharp drop in wholesale prices, commentators say it could be a long time before these cuts flow through to consumers.

InternetNZ chief executive Vikram Kumar said the lower wholesale rates apply only to new contracts and consumers will need to wait until internet companies re-sign with Southern Cross before prices change.

"It is absolutely not going to happen in the short term," Kumar said.

Telecommunications Users Association chief executive Paul Brislen agreed the cuts would take a while to reach the retail market.

"It'll increase data caps eventually, but because the ISPs are buying capacity on a 10-yearly cycle - the contracts run for quite some time - the odds are you won't mostly see much of anything in the short-term at all.""

I find that comment a bit odd, We've always seen our prices effectively drop only weeks after SxC price drops. If the ISP is expecting it's bill to drop then it might be the case but if the ISP maintains the $$$ spend they simply get a nice bump in capacity

Most problems are the result of previous solutions...

All comment's I make are my own personal opinion and do not in any way, shape or form reflect the views of current or former employers unless specifically stated

"It'll increase data caps eventually, but because the ISPs are buying capacity on a 10-yearly cycle - the contracts run for quite some time - the odds are you won't mostly see much of anything in the short-term at all.""

Do they really buy in 10 year cycles?, that seems a long time in tech years.

10 years ago most people still had dial up (if they had internet at all)

Also ISP's have far more costs than just international transit... you've got: wholesale cost of using the line/adsl service to Chorus, backhaul, colocation of equipment, general equipment, domestic transit, staff, office costs, marketing etc etc etc.

I highly doubt you'll see any major pricing changes for the end user and when they do they will be minor. As Ragnor said INT is only one piece of the price puzzle.

What I think will happen is people may notice better INT speeds as ISP's get their INT bumped up without a price change, Even if we say that INT reseller's only drop their prices to ISP's by 20% when your buying say 1gbit that's a 200mbit increase for nothing which should help

Most problems are the result of previous solutions...

All comment's I make are my own personal opinion and do not in any way, shape or form reflect the views of current or former employers unless specifically stated

jonherries: Interesting to me that the average change over the past 10 years the price has gone down by 21% and this year it is 44%.

Have to remember they are part way through an upgrade from 10gbps per wavelength to 40gbps per wavelength, meaning that when complete they will have a 4x increase in capacity, with a further increase to 100gbps per wave length by the end of next year, so their capacity increase is far from linear.

As mentioned above by others, the cost of international transit is by no means the largest component in delivering DSL, and hasn't been for years now. Port costs however are, and are as much as $45 for a naked DSL port, and that's before the ISP does anything with it. Strangely non-naked port costs are less than half that...